All three indexes had been down earlier in the session, but recovered in the afternoon as investors stepped in to buy the stocks, many of which are sitting at multi-year lows. Pharmaceutical and biotechnology stocks have suffered punishing declines this year for a number of reasons, including setbacks in efforts to develop new medications.

But on Thursday, biotech firm MedImmune delivered apparently good news when it said the Food and Drug Administration hasn't requested additional patient testing of the company's experimental flu vaccine, FluMist. Such testing would have been expensive and time consuming. See full story.

The promotional partnership was not good news, however, for Biogen, shares of which tumbled $2.97, or 8 percent, to $32.30. Biogen
BGEN
gets the bulk of its revenue from a competing MS treatment, Avonex.

With the world's largest pharmaceutical company promoting the drug, Serono's Rebif product is now seen as more of a competitive threat to Avonex.

Elsewhere, shares of Bristol-Myers Squibb
BMY, -0.41%
dropped $1.04, or 5 percent, to $22.11. The Financial Times reported that the U.S. Securities and Exchange Commission has launched an investigation into whether Bristol-Myers may have inflated its revenue by $1 billion last year. The drugmaker said it would cooperate with the inquiry. See full story.

The biggest decliner of the day was stock of ICN Pharmaceuticals
ICN, -4.02%
which lost more than half its value after the drugmaker said it would fall well below second-quarter profit expectations because of lower-than-expected sales. Shares of ICN closed down $10.65 to $9.30. ICN warns on second quarter sales, earnings

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